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> The SEC has awarded approximately $1.3 billion to 278 individuals since issuing its first award in 2012. That's either alot of corruption that's been caught

> The SEC has awarded approximately $1.3 billion to 278 individuals since issuing its first award in 2012. That's either alot of corruption that's been caught due to whistleblower rewards or an indication of the amount of corruption in the US if you are more cynical. Whsitleblower's are eligible for 10 to 30% of the money collected from fines, so the SEC is also making alot of money from this as well. Here's the list they maintain if you want to look: https://www.sec.gov/whistleblower/pressreleases https://www.sec.gov/whistleblower/pressreleases

gumby 4y ago
> That's either alot of corruption that's been caught due to whistleblower rewards or an indication of the amount of corruption in the US if you are more cynical. Given a stock market of around $100T (and the SEC covers more than stocks) it would argue for a rather small amount of corruption, were it the only signal. In fact I believe the corruption at this level is quite small. Really, why bother when you can do it wholesale (e.g. telecoms simply capturing the regulators)? > Whsitleblower's are eligible for 10 to 30% of the money collected from fines, so the SEC is also making alot of money from this as well. These fines go to the treasury; it's not like they fund operations from it. BTW civil forfeiture, if you even believe in it at all, should go to the state or federal general funds. The current system is simply legalized theft.
- lotsofpulp 4y ago
  > In fact I believe the corruption at this level is quite small. Really, why bother when you can do it wholesale (e.g. telecoms simply capturing the regulators) That is still corruption. Sufficiently provable and easy to convict corruption might be small. Quid pro quo corruption where nothing is in writing is huge.
  - soledades 4y ago
  - elil17 4y ago
    There is a very interesting podcast episode on "Freakonomics" where they interview a researcher who posits that there are forms of corruption that speed economic growth at the cost of fairness and other forms which do not speed economic growth. https://freakonomics.com/podcast/season-11-episode-12/ https://freakonomics.com/podcast/season-11-episode-12/
  - gumby 4y ago
    Sure it is, but my point is you’re not getting any information from signal (the number of SEC whistleblowers) when the real corruption is elsewhere.
- Waterluvian 4y ago
  I have a feeling that a system with no corruption would be far less efficient and productive than one with some corruption
  - thatguy0900 4y ago
    A system can be more effecient and more productive and still be worse for the common person in it. Probably a lot of people on hns lives would be better of if they could reliably grease the palms of people around them with some pocket change, but the average person?
  - dahart 4y ago
    That might be true according to some of the economic measures we’ve used in the past. But why should maximum efficiency and productivity even be the goal if it does damage? How efficient and productive is enough? If things could be efficient enough to support society without corruption, maybe we should prioritize safety over corruption even if it is less efficient? This idea that a little badness is more efficient than no badness has played out multiple times in the past and one thing we’ve learned repeatedly is that humans are pretty bad at understanding and accounting for the full and true economic costs of a little badness, especially the humans that are making money. More often than not the damage done by badness is externalized and the costs ignored by the people who are profiting from the environment that tolerates the badness. There are plenty of examples of this from the environment to product safety standards to the stock market. It was argued (fiercely) that the costs of seatbelts in cars was too high a price to pay for something that wasn’t helping every driver - most people, after all, don’t crash. This flawed thinking completely failed to capture the economic costs of car accidents, and today very few people even in the auto industry would disagree or even think of arguing against seatbelts. We still don’t grasp the economic costs of pollution. We’re just starting to see the economic damage that allowing a little badness has had over the last century, and it’s already many orders of magnitude higher than most people thought several decades ago. Similary, we’ve not really tallied the economic costs of poor people who’ve been pushed into bankruptcy by financial corruption. The growing inequality driven in part by lack of financial regulation is almost certainly fueling our political unrest, which we of course haven’t measured economically, and might not end well.
- sgjohnson 4y ago
  > BTW civil forfeiture, if you even believe in it at all, should go to the state or federal general funds. The current system is simply legalized theft. It’d still be basically legalized theft even if it went to state/federal treasury. There should be no such thing as a civil asset fortfeiture.
  - gumby 4y ago
    > There should be no such thing as a civil asset fortfeiture. Well yes, I agree, I;m just pointing out the perverse incentive in how it is done.
2OEH8eoCRo0 4y ago
The US is huge. 278 whistleblowers from 2012 to present is not bad at all.
- OJFord 4y ago
  How do you know in which direction it's not bad? As in, zero is obviously (probably) bad; a million is obviously (differently) bad.
- srveale 4y ago
  278 represents the subset of crimes which 1. Had the whistle blown 2. Were investigated 3. Had enough evidence found during the investigation 4. Were fined successfully 5. Were announced via the SEC whistleblower program Nobody knows the dropoff at every stage but it's certainly non-zero and so we can't judge the level of crime based on the number we know coming out at stage 5. I don't think it's overly cynical to assume that 278 is a small percentage of the actual count of financial crimes in the US since 2012.
  - handoflixue 4y ago
    > we can't judge the level of crime based on the number we know coming out at stage 5. We'll never know the exact details, but we can still piece together a statistical model of the world from the evidence we do have: We can compare it to similar systems, for example. Murderers have to go through similar steps, so one might reasonably conclude that high-value financial crimes are less common than murder. If there are other countries with similar programs, we could also compare our number to theirs.
    - Retric 4y ago
      The minimum threshold to be eligible for a whistleblower reward is 1 million in sanctions. So, I think it’s at best an estimate of extreme financial crimes rather than just high.
    - srveale 4y ago
      I don't think a comparison with murder rates is valid. The "whistle" is much more likely to be blown for a murder, as there is a corpse or a missing person. Additionally, those committing financial crimes are mostly people with some combination of wealth and clout, better allowing them to fight the accusation and investigation, and there is the revolving door effect between the regulators and those they are supposed to regulate. Plus, why would that comparison be useful? Everyone is capable of murder, not everyone is even in a position where they could attempt to commit the types of crimes that get announced via the whistleblower program. So if we were to compare, it would have to be some kind of per capita comparison, where the population for financial crimes is members of the financial industry. In which case the numbers start to look more damning.
babypuncher 4y ago
Maybe the IRS should adopt a similar program
- kenny11 4y ago
  They do: https://www.irs.gov/compliance/whistleblower-office https://www.irs.gov/compliance/whistleblower-office
- elil17 4y ago
  Some version of this exists across the entire US government - it's called a qui tam. However, qui tams are more limited to cases where the government has been defrauded (as opposed to Dodd Frank which covers financial violations that don't directly effect the US government). For corruption within the government, you can report it to an inspector general (there is a different inspector general for each government agency), although there is not typically a financial reward associated with such a report.
- mindslight 4y ago
  Or NSA. They've got a big problem of not appreciating whistleblowers.
cm2187 4y ago
I don't know how the 1.3bn breaks down but please keep in mind the trend after the financial crisis is to issue fines that are disproportional with the size of the offense, as a punitive way. So it's not clear the 1.3bn has anything to do with the size of the underlying frauds.
ww520 4y ago
That's a minuscule amount spread over 10 years for the huge markets watched by SEC. SEC probably should have done more to encourage more whistleblowers coming forward.
- nojito 4y ago
  The larger issue is that the SEC is so woefully staffed that they can do as many investigations on tips as they come in.
  - ww520 4y ago
    SEC should use some of award damage to hire more people.
- anonu 4y ago
  Probably why there's a press release with such comedically obscure wording...

gumby 4y ago

> That's either alot of corruption that's been caught due to whistleblower rewards or an indication of the amount of corruption in the US if you are more cynical. Given a stock market of around $100T (and the SEC covers more than stocks) it would argue for a rather small amount of corruption, were it the only signal. In fact I believe the corruption at this level is quite small. Really, why bother when you can do it wholesale (e.g. telecoms simply capturing the regulators)? > Whsitleblower's are eligible for 10 to 30% of the money collected from fines, so the SEC is also making alot of money from this as well. These fines go to the treasury; it's not like they fund operations from it. BTW civil forfeiture, if you even believe in it at all, should go to the state or federal general funds. The current system is simply legalized theft.

lotsofpulp 4y ago
> In fact I believe the corruption at this level is quite small. Really, why bother when you can do it wholesale (e.g. telecoms simply capturing the regulators) That is still corruption. Sufficiently provable and easy to convict corruption might be small. Quid pro quo corruption where nothing is in writing is huge.
- soledades 4y ago
- elil17 4y ago
  There is a very interesting podcast episode on "Freakonomics" where they interview a researcher who posits that there are forms of corruption that speed economic growth at the cost of fairness and other forms which do not speed economic growth. https://freakonomics.com/podcast/season-11-episode-12/ https://freakonomics.com/podcast/season-11-episode-12/
- gumby 4y ago
  Sure it is, but my point is you’re not getting any information from signal (the number of SEC whistleblowers) when the real corruption is elsewhere.
Waterluvian 4y ago
I have a feeling that a system with no corruption would be far less efficient and productive than one with some corruption
- thatguy0900 4y ago
  A system can be more effecient and more productive and still be worse for the common person in it. Probably a lot of people on hns lives would be better of if they could reliably grease the palms of people around them with some pocket change, but the average person?
- dahart 4y ago
  That might be true according to some of the economic measures we’ve used in the past. But why should maximum efficiency and productivity even be the goal if it does damage? How efficient and productive is enough? If things could be efficient enough to support society without corruption, maybe we should prioritize safety over corruption even if it is less efficient? This idea that a little badness is more efficient than no badness has played out multiple times in the past and one thing we’ve learned repeatedly is that humans are pretty bad at understanding and accounting for the full and true economic costs of a little badness, especially the humans that are making money. More often than not the damage done by badness is externalized and the costs ignored by the people who are profiting from the environment that tolerates the badness. There are plenty of examples of this from the environment to product safety standards to the stock market. It was argued (fiercely) that the costs of seatbelts in cars was too high a price to pay for something that wasn’t helping every driver - most people, after all, don’t crash. This flawed thinking completely failed to capture the economic costs of car accidents, and today very few people even in the auto industry would disagree or even think of arguing against seatbelts. We still don’t grasp the economic costs of pollution. We’re just starting to see the economic damage that allowing a little badness has had over the last century, and it’s already many orders of magnitude higher than most people thought several decades ago. Similary, we’ve not really tallied the economic costs of poor people who’ve been pushed into bankruptcy by financial corruption. The growing inequality driven in part by lack of financial regulation is almost certainly fueling our political unrest, which we of course haven’t measured economically, and might not end well.
sgjohnson 4y ago
> BTW civil forfeiture, if you even believe in it at all, should go to the state or federal general funds. The current system is simply legalized theft. It’d still be basically legalized theft even if it went to state/federal treasury. There should be no such thing as a civil asset fortfeiture.
- gumby 4y ago
  > There should be no such thing as a civil asset fortfeiture. Well yes, I agree, I;m just pointing out the perverse incentive in how it is done.

2OEH8eoCRo0 4y ago

The US is huge. 278 whistleblowers from 2012 to present is not bad at all.

OJFord 4y ago
How do you know in which direction it's not bad? As in, zero is obviously (probably) bad; a million is obviously (differently) bad.
srveale 4y ago
278 represents the subset of crimes which 1. Had the whistle blown 2. Were investigated 3. Had enough evidence found during the investigation 4. Were fined successfully 5. Were announced via the SEC whistleblower program Nobody knows the dropoff at every stage but it's certainly non-zero and so we can't judge the level of crime based on the number we know coming out at stage 5. I don't think it's overly cynical to assume that 278 is a small percentage of the actual count of financial crimes in the US since 2012.
- handoflixue 4y ago
  > we can't judge the level of crime based on the number we know coming out at stage 5. We'll never know the exact details, but we can still piece together a statistical model of the world from the evidence we do have: We can compare it to similar systems, for example. Murderers have to go through similar steps, so one might reasonably conclude that high-value financial crimes are less common than murder. If there are other countries with similar programs, we could also compare our number to theirs.
  - Retric 4y ago
    The minimum threshold to be eligible for a whistleblower reward is 1 million in sanctions. So, I think it’s at best an estimate of extreme financial crimes rather than just high.
  - srveale 4y ago
    I don't think a comparison with murder rates is valid. The "whistle" is much more likely to be blown for a murder, as there is a corpse or a missing person. Additionally, those committing financial crimes are mostly people with some combination of wealth and clout, better allowing them to fight the accusation and investigation, and there is the revolving door effect between the regulators and those they are supposed to regulate. Plus, why would that comparison be useful? Everyone is capable of murder, not everyone is even in a position where they could attempt to commit the types of crimes that get announced via the whistleblower program. So if we were to compare, it would have to be some kind of per capita comparison, where the population for financial crimes is members of the financial industry. In which case the numbers start to look more damning.

babypuncher 4y ago

Maybe the IRS should adopt a similar program

kenny11 4y ago
They do: https://www.irs.gov/compliance/whistleblower-office https://www.irs.gov/compliance/whistleblower-office
elil17 4y ago
Some version of this exists across the entire US government - it's called a qui tam. However, qui tams are more limited to cases where the government has been defrauded (as opposed to Dodd Frank which covers financial violations that don't directly effect the US government). For corruption within the government, you can report it to an inspector general (there is a different inspector general for each government agency), although there is not typically a financial reward associated with such a report.
mindslight 4y ago
Or NSA. They've got a big problem of not appreciating whistleblowers.

cm2187 4y ago

I don't know how the 1.3bn breaks down but please keep in mind the trend after the financial crisis is to issue fines that are disproportional with the size of the offense, as a punitive way. So it's not clear the 1.3bn has anything to do with the size of the underlying frauds.

ww520 4y ago

That's a minuscule amount spread over 10 years for the huge markets watched by SEC. SEC probably should have done more to encourage more whistleblowers coming forward.

nojito 4y ago
The larger issue is that the SEC is so woefully staffed that they can do as many investigations on tips as they come in.
- ww520 4y ago
  SEC should use some of award damage to hire more people.
anonu 4y ago
Probably why there's a press release with such comedically obscure wording...